Next predicts drastic slowdown in UK sales growth
- In its first-half update, Next reported revenues of £3.2 billion for the six months until July, a 10.3% increase from the previous year, with online sales rising 11.1%.
- The retailer forecasted a drastic slowdown in full-price UK sales, expecting growth to drop from 7.6% to 1.9% in the second half.
- Next emphasized the importance of international expansion to counterbalance potential declines in domestic performance.
In the United Kingdom, Next, a significant clothing and homeware retailer, experienced notable changes in sales dynamics in its recent trading update. Reporting total revenues of £3.2 billion for the six months leading to July, the company showcased a 10.3% year-on-year increase, driven by robust sales of full-price items which rose 10.9% from the previous year. However, while online sales surged by 11.1% to £1.3 billion, store-generated sales recorded a more modest growth of 3.7% amounting to £899 million. The firm’s strong performance in the first half is attributed, in part, to operational disruptions faced by major competitors, most notably a cyberattack impacting Marks & Spencer's online business, providing Next with a temporary competitive edge. Despite the optimistic figures in the initial half, Next indicated a concerning forecast for the remainder of the year. The company expects a significant slowdown in full-price sales within its core UK market, predicting a decline from an earlier growth of 7.6% in the first six months to just 1.9% in the latter half. Online sales growth is anticipated to decelerate to 3.6%, and store sales are projected to decline by 0.6%. This stark change highlights potential challenges facing the UK's retail sector, such as an overall projected economic growth that Next deemed as